Policy Papers

Platform-Enabled Small Businesses and the Geography of Recovery

The eBay Policy Lab’s latest paper looks at the country-level geographic dispersion of new enterprise formation on eBay compared to new establishment formation in the traditional economy during the 2010-14 recovery. Our research builds upon a 2016 report published by the Economic Innovation Group (EIG) that examined Census Bureau data on the net growth of business establishments over three recovery periods in the past 25 years and revealed that the geographic distribution of new firm growth became increasingly concentrated in a smaller number of more populous counties. We replicated this analysis for eBay-enabled SMEs from 2010-2014 and discovered a significantly more geographically inclusive spread of new enterprise formation on eBay compared to the brick and mortar economy as reported by EIG. We believe the findings point toward Internet-enabled small business growth as a force for economic dynamism and inclusive economic growth that are potentially countering the trends in the traditional economy over the past three recoveries. Our findings also raise important questions regarding the possibility that traditional government statistics are missing some Internet-enabled micro firm growth, and that growth in more remote areas tends to stem from Internet platform use because it facilitates remote commerce.

The animation below provides a look at the consolidation of net establishment growth over the past three economic recoveries vs. new enterprise formation on eBay. The maps on the left show the counties that produced half of the net establishment growth for the 1992-1996, 2002-2006, and 2010-2014 economic recoveries. The map on the right shows the counties that produced half the net growth in eBay-enabled SMEs from 2014. We invite you to explore our findings to learn more about this and additional data on the Internet-platform economy and the geography of recovery.